Term life insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. The policyholder pays a premium for a set period, typically between 10 and 30 years, and if the insured dies during that time, a cash benefit is paid to the beneficiaries. If the policy expires and the insured is still alive, there is no payout.

Here are some key features of term life insurance:

• Fixed rate: The policy provides coverage at a fixed rate of payments for a limited period of time.
• Level premiums: Most term policies offer level premiums for the duration of the policy.
• Pure death benefit: Term life insurance is a pure death benefit, meaning it is primarily used to provide coverage of financial responsibilities for the insured or their beneficiaries.
• Affordable: Term life insurance is often more affordable than permanent life insurance policies.
• Convertibility: Many term policies offer the option to convert from term to permanent insurance.

Term life insurance is not generally used for estate planning needs or charitable giving strategies but is used for pure income replacement needs for an individual. It is a popular choice for young people with children, as parents can obtain substantial coverage for a low cost, and if the insured dies while the policy is in effect, the family can rely on the death benefit to replace lost income.